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Securities Class Action Filings Decline

Federal
securities class action activity declined in the first half of 2009,
according to a report released Monday by the Stanford Law School’s
Securities Class Action Clearinghouse and Cornerstone Research.

Eighty-seven
federal securities class actions were filed in the first half of
2009, a 22.3% decline from the 112 filings in both halves of 2008.
Only 35 filings were observed in the second quarter, the lowest
quarterly total since the first quarter of 2007. Financial services
firms are defendants in 66.7% of these filings, an increase over the
50.0% share of all filings in 2008.

“Securities
litigation activity continues to be driven by claims against
financial services firms, but all the large firms in the industry
have already been sued,” said Joseph Grundfest,
director of the Securities Class Action Clearinghouse and a former
SEC commissioner. “Plaintiffs are therefore filing claims
against the smaller number of smaller financial services firms yet
to be sued.”

Federal
securities class action lawsuits against foreign-based issuers have
been rising for more than a decade and reached 31 filings (13.8% of
total filings) in 2008, with an average of 18 foreign firms (9.4% of
total filings) sued in each year since 1997. Thus far in 2009, 18
lawsuits have been filed against foreign firms, representing 20.7%
of the total. Filings against foreign firms are concentrated in the
financial sector, as 41.9% of the filings in 2008 and 77.7% of the
filings in the first half of 2009 were against financial firms.

Grundfest
says that a disproportionate number of recent claims against foreign
companies targeted the financial services sector, which suggests the
uptick in litigation activity against foreign companies could be a
side effect of the larger trend to sue financial services firms.

The
full text of thereport Securities Class Action Filings:
2009 Mid-Year Assessment is available here.